The Eurointelligence Podcast
Can Barnier fix a broken system?
Welcome to the Euro Intelligence Podcast. I'm Wolfgang Monchow, and with me, Asusana Monchank and Jack Smith. Today, we want to talk about Michel Barnier. Emmanuel Macron has appointed Michel Barnier as Prime Minister, very much a surprise move. Asusana, how did it happen? What will happen now? Just going back to the elections, like 15 one days ago, the left alliance won these elections. And since then, Emmanuel Macron did interview with several candidates and several other heavy rates of parties. And the problem was there were so many red lines and not clear majorities. He tried Xavier Bertrand and Bernard Casnev after he refused to accept the left candidate Lucie Castetz. Here comes Michel Barnier. No one has seen him coming. He was no one's candidate, and he's definitely not a candidate from the left, won these elections. He's really a staunch kind of candidate from the right. He only actually convinced Macron to be the candidate because he could guarantee the stability of a government by the Rasson de Manasseenau, who emerged as the power broker by backing Barnier and no one else. So here we are. We have an election that for the centrist teamed up with the left to block the Rasson de Manasseenau from coming into power. Now we are back to square one where the Rasson de Manasseenau has their final say over who's going to be the prime minister and whether he can last or not. That's so funny. It's a bit of a cautionary tale about the effects of tactical voting, isn't it? It definitely is. I think maybe the voters wonder what on earth did they do and why did this square the circle to end up with something that they could have heard in the first round in the elections. Is Michel Barnier maybe to be seen in the way? We remember him here in the UK and obviously in Brussels, too, very much as a technocrat. When he was appointed for the Brexit negotiation, he wasn't appointed because he was from the right. He was appointed because he was a commissioner. He was an experienced civil servant. Absolutely. He was a very competent guy and also a well-meaning guy. I know him a little. This is a somebody who you would instinctively trust. The Barnier seems a lot less out for himself than some of the other people that were running. Exactly. Is this perhaps of a Mario Draghi type prime minister? Not a technocrat, not like a Mario Monty. That was technocrat. But Draghi was a political prime minister for Italy, even though he actually did not belong to a party. He ran a large coalition. Is that a similar kind of... should we see Barnier more in that light or should we see him as a man the right? A technocrat, yes. But he also has been a politician in a sense. He was a minister under Jacques Chirac and under Nicolas Cauzi. He's been in a foreign minister. He has diplomatic clout and negotiations. Of course, we've seen in Brexit. So these skills will probably help him in his job. Definitely, a Barnier was someone who quietly prepared for this moment and who has not been on the radar screen of anybody. Really no one's candidate. He wasn't seen by anybody as a potential candidate. Except maybe for Eric Jotty, who put him on the list. So that he emerged as the prime minister because all the other options failed is in itself kind of symptomatic of the way he can move through the ranks diplomatically. So it is something that will benefit him when he has to actually form or negotiate majorities in the assembly because none of the groups, none of the three groups, has a majority. Of course, this will hardly, well, we don't expect the left to come to the table so easily for any of these, his elections. So he will probably concentrate his efforts on the right. But he also says he's open to everyone. So he really signals that is very different from his presidential bid in 2021 when he was trying to become the candidate for a little bit of calm, but failed. Looking at his programme, there were really elements that very much reminded us from Marine Le Pen when it comes to migration. And of course, the far right will have a heyday reminding him that his positions were very much hers. Of course, today is a completely different game. He will be a prime minister who has to forge in the consensus without a majority is not a presidential candidate. So it's a completely different job. He has to fulfill. Yeah, so my impression of Banyi for what it's worth is that he's definitely somebody with quite well defined political views, perhaps, I think quite clearly more so than Mario Draghi, who's usually he's very cautious about speaking to kind of, I guess, openly about politics and his own political beliefs. But Michelle Barney is certainly prepared to do that, which is what he did in his presidential bid. That said, I think that Barney's attitude has always been that that is one thing. But the more important thing is making a success of whatever role he's been put in. And I expect that to be the attitude that he takes here. And so making a success of whatever role he's been put in this context really means finding the most workable and acceptable form of government given the parliamentary situation. So this was from my cons perspective, who made a number of mistakes in the last few months, as we discussed and wrote. This was a good move. Well, you would have wished to find a centrist candidate who can who can form a government that includes the right and the left from the socialist left in the government. But this plan didn't have any attraction for the socialists who would not actually separate from the left alliance. It also didn't work for Lipa Pupikar, who didn't want to be part of a government who said, yes, we support you, but not in government. So he couldn't find he couldn't find that alliance with his parties. And from the left, the idea of taking a candidate on the left or even a technician that was a technician candidate. But these were all kind of rejected again by the Rasson de Monassinai and the socialists or all parties of the left refused any candidate other than theirs. So these were all the red lines, meaning there was no practical solution forward, except for the ones that is accepted by the Rasson de Monassinai. Let's talk about the reaction of the left, how this will play within the left and the right. Jack, can you talk to us what you think the left will do? So I mean, I think the first thing that the left will do is that they will mobilize and organize rallies and demonstrations and protests. I mean, I kind of think in the near term, there's not very much that they can do. Like they have no kind of alternative pathway towards a workable government. So there's not much they can do in that respect. Of course, they can file censure motions. But if the Rasson de Monassinai was not prepared to back them up and also support the censure motion, again, there's not really very much they can do. I think the bigger question is what the left parties and their voters decide to do either in the next legislative election if it comes before 2027 or in 2027, right? Which is to say the question is whether they will continue to kind of vote tactically, they'll continue to kind of do things like stand down in favor of centrist candidates, they'll continue to hold their noses and vote for people that they don't necessarily like that much to keep out the far right. I don't know whether that's necessarily going to happen anymore. If it's one thing that Barnier himself is from the right, kind of a lot of these politicians and voters will even if they dislike Barnier, they would dislike the Rasson de Monassinale even more if push came to shove. I think the bigger issue is if you get into a situation where this kind of government is like tacitly supported by the Rasson de Monassinale, and then that might start to sour left-wing politicians and voters on the concept of tactical voting the next time around. If they kind of turn it, look at this and they think, okay, well, effectively these guys are collaborationists and if we vote for them, it's if not the same as voting for the Rasson de Monassinale, similar to doing that, that I think is more of the risk for this strategy going forward if that's the conclusion that these parties come to. What will the right to do? What will what will depend on? Will she support Barnier? What is a strategic calculation? When they lost their elections, it was actually Jan Baddella who wanted to cry defeat and wanted to really go gang-how like Jean-Luc Menager now does, or did that done. But Melanie Penn was holding him back and saying let the dust settle, don't do anything. It was nothing heard from the Rasson de Monassinale over the whole summer. I'm really totally quiet and two and a half months later, she came out with this bang saying, okay, we say no to these candidates, but we say yes to Barnier under the conditions that first of all he respects us as any other group, so no cordon salitier. Second, that some of our policies are reflected like on security, immigration and on purchasing power. And third one, the introduction of proportionality ahead of a potential next legislative elections. I mean, Jack, you wrote about that. Yeah, I wrote about proportionality. I mean, the interesting one is, of course, the left support proportionality too. So notionally, there is a majority in the assembly now to change the voting system to a proportional system now granted. I think if they did that, it wouldn't be a proportional system like the Netherlands or Germany, it would be a proportional system based on day part Mon. Day part Mon are kind of like counties. I guess that's the best way to describe them in France, similar in kind of size and level, but that that's quite different. And then it becomes complicated with the system because the day part Mon are hugely variable in size and in population. It'll be interesting to see with that, whether these parties vote together for this or whether the left basically turns around and says, look, we're absolutely not voting with the Rasson de Monassinale. Even if that means we don't get to do something that we really want to do. What would be the electoral seat effect? I mean, if to the extent that this is foreseeable, we've been critics of these sort of gerrymandering electoral changes, and they usually don't work so well in Europe, what would be the expected? Yeah, well, I think if you went to a departmental system of proportional representation, it would be much better for the Rasson de Monassinale because effectively you have in France a lot of kind of rural day part Mon. And then you have a smaller number of urban ones. And the effect that you would get is that the left and center's votes would be more like packed in the urban areas, whereas the Rasson de Monassinale would dominate in more rural areas. And so that would be quite favorable for them. But I think that's ignoring the fact that again, there are ways of voting tactically in this system, and there are ways in which parties can adjust to it. That's what we always see when electoral systems change, is that maybe once or twice, some people are caught off guard because they've not really digested the new reality, but eventually political parties adapt to whatever the new rules of the game are. I kind of would say fundamentally, it's not like a trick of the electoral system that the Rasson de Monassinale didn't win. It is because voters on the left and the center were prepared to vote tactically against the Rasson de Monassinale. It was because basically of a choice that these voters made. It was because of the choice the parties made to stand down candidates, and it was the choice the voters made to kind of tacitly support that rather than punish them by abstaining. Exactly, and parties and voters have the opportunity to do these things under any system. Yeah, exactly, right? As long as the voters can understand the system, which they clearly could, in the case of France because of how well organized they were, that's kind of it really. I think eventually everybody would adjust to the new reality, whether that means, for instance, standing down your candidates in day-part mall where you don't really, you're coming in third and you don't think you really have a chance of going up against the Rasson de Monassinale or some other way of doing it, then they'll figure out ways of doing that. So that's kind of what I think will ultimately happen. But again, I don't know if this even will happen in the first place because that kind of relies on the left deciding that it's prepared to vote with the Rasson de Monassinale on something. They did that. I mean, they were ready for the pension reform. They were ready to do that and join up forces on that. So it really depends on how much they want that proportionality, whether they would go that down that road and who's actually starting to file for it. And also, since emotions also, there were moments where both sides were actually ready to roll together in the past. So it's not really unthinkable. It's not unthinkable, but I think the situation is a bit different now because the Rasson de Monassinale is much stronger than it was back then. So I think it's a bit more of a present threat. I mean, the interesting thing for me, when coming back to the Rasson de Monassinale, what it means for them is that they actually don't have to, I mean, they clearly lost out in the elections. So because of tactical voting, first round actually predicted that they could win this elections. And then here they come in third place due to tactical voting. So that was the first defeat. But now that the left is crying wolf about that, not being granted the right for exerting its democratic legitimacy, it is actually benefiting the Rasson de Monassinale because they don't have to say anything. But everyone will think of them when the left is screaming of democratic legitimacy and think of them implicitly. So here comes this plane where all of a sudden a Marine Le Pen looks like, again, presidential looks like she's the one who has composure, who doesn't go into the big ring bit and doesn't go emotional on things, who can hold it together, which actually could help her later to build up her momentum. And also what works for her is it would have been really difficult for her if Jordan Badala would have won these elections because then he would have been first and would have probably ended up as prime minister. And these we know that Emmanuel Macron was prepared to give him that if he were to have won the elections. Now that would have been very difficult for Marine Le Pen and it would have probably upset him. Yeah, it would have slightly upset the balance of power within the party. Exactly. So this way, it's much better. She is on top of the things and she can be the first mover and that can, if she were to win the next election, presidential elections, she could then nominate Badala as a prime minister, but it comes for her rather than for direct. So that would be Badala as to the junior to her? Yeah, Badala. I mean, of course, you know, sometimes when you watch the internal dynamics in the Rosombo Monacional, it's a bit like watching one of these like, you know, French historical dramas about medieval kings. It's a kind of similar atmosphere where you have like the kind of family in the center. And then you have Badala who is there. Of course, he's been put there by Le Pen, also by kind of, well, not fully marrying into the dynasty, but kind of ending up there through kind of personal ties. And he's both there kind of as a potential successor, but also as a potential, I guess, threat to Le Pen's consolidated control of the party. Another subject, which is extremely boring by comparison to all these exciting political political developments, is what will this do to the French budget? I'm so sorry to intrude with this. A lot of people have been concerned about French fiscal sustainability. Bonier seems to be the man of Brussels. Some people might say Brussels has installed its Bonier into the French political system. Will he now deliver the austerity that the seven-year adjustment period under the newly agreed stability pact requires? So is this going to be an austerity government? And question two, if that is the answer to that is yes, what will be the politics of austerity going forward? There's a good question. We don't know yet how exactly he will change the budget. I mean, we know that Gabriel et al, he was preparing a reversible budget that already had some 10 billion in savings in there, because again, the budget figure has turned out to be higher this year than expected, the deficit. And that comes after last year's deficit had to be revised upwards from 4.9 percent of GDP to 5.4 percent. And now we are for this year looking at a 5.6 percent, rather than the 5.1 percent that has been pencil in the stability program. So two years in a row, there's sort of a difference of 15 billion in the budget. There are all sorts of different reasons, they're not the same. But it sure goes to show that this is an uphill struggle. So now, Bonier Lamere already prepared some measures, emergency brake measures, whether or not Bonier will take the map that is up to him, how much time he still has to actually dive deeper into these things and actually change the inner workings. That's also questionable. He only has until September 25th, before the copies have to be presented in the council, in the cabinet, and then before they have to go to the assembly on the 1st of October. So it's not really much time to change the whole thing. He put some priorities already up there. Of course, for Brussels, it looks like he's the governor of stability, also for the international investors. And I think that's also one of the reasons why this whole, if you look at the sequencing of when the budget scare came in, just in the middle of these two debates of whom to nominate the prime minister, this scare story really tilted the whole debate a little bit more towards the right, rather than to go for an adventurous government on the left with new tax raising powers and stuff that we actually don't know whether they could produce a stable budget next time around. So in that sense, I don't think he will do a complete overhaul of a whole budget, but he probably will pick up on where Lamere left and just leave some of his own notes on it on the copy. Over a seven year period, France is asked to make very significant just a correction here at the moment. It's over four years. So they will have to apply for Brussels and granting them six years. There's absolutely right. The assumption is that Brussels will accept it. I mean, the stability pact for so the for seven years, which I think Italy is still on a four year trajectory. If I'm not entirely mistaken, but the assumption has always been that the four year trajectory is for both countries too tough, that they will ultimately have to be a seven year adjustment. A four year adjustment would have been economically highly under counterproductive that would be a massive amount of austerity applied. So a seven years adjustment is a much move away and much more politically. No, no, certainly. And aside from the politics, you avoid the kind of pro-cyclical effect of digging yourself into an even deeper hole. But it's still tough. A seven year adjustment period or apply austerity over a longer period. It shifts expectations because once you're a seven year period, that's the political lifeline of your average government probably longer. So there's a big deal. I get the impression that what happened is that it will ultimately benefit Le Pen because she's got a prime minister who would deliver at least part of her program. She is not held responsible for any mistakes that happen. Macron gets to stay in power without a popular uprising until the end of his term. There won't be any sort of political challenges to his supremacy. So it seems to fit everybody but the left. That seems to be. Yeah, the left of the real log ones out here. Certainly, I think I guess the way that you could kind of describe the situation for Le Pen is that it's power without responsibility. Indeed. And that's a well. And yeah, I was about to say that would suit everybody well, right? So it's a very enviable position to be in if you're Marine Le Pen. Yeah, I think in terms of the, I guess the economic side of it, what the government does with the budget, it's impossible to tell really until they actually present it sometime at the end of this month. But for what it's worth, I mean, I'm sure that Barney realizes that everybody's been watching France and not in a good way. He's a savvy person who will understand the implications of whatever he does with the budget for France's standings with foreign investors in the bond markets. In terms of the politics of it, I think this also depends not just on the amount that you're cutting, but how you actually make the cuts. The more evenly you distribute it across different budget areas, the more likely you are to avoid an immediate political backlash, as opposed to concentrating it more in something politically salient. I think it's worth noting that each time there's been a really significant popular pushback against these kind of measures in France, it's been because the government decided to focus on one particular thing that really got people upset. With the Gillegion, it was the petrol tax. Of course, more recently, it was the pensions. I was here in December of 2019. I remember when at that point, it was the government trying to change the special pension regime for S&S af railway workers, which was absolutely something that really upset them. I think the most of the lesson there is that when you do focus on these one things and you give people a bit of a lightning rod for their discontent, that's how things can really flare up. Whereas if you're a bit more careful and savvy with how you do it, then maybe you can try and avoid that a little bit more. Yeah, but you get another risk indeed. I think this is sort of the trait of you have in France. When you make structural shifts, you can try to impose austerity through structural reform by privatizing certain industries or changing your pension system. These are economically speaking, intelligent ways of doing it, but they have huge political costs as we saw in France. But if you do the other way, if you do a little bit of this particular savvy, which is politically savvy indeed, but it comes as a long-term economic cost because that's what the Germans did. They didn't really cut, they didn't did anything dramatic. It's just a death by a thousand cuts. So if you have a little bit of investment gone here and there and the police doesn't have computers and everybody's using the fax machine, and you know, basically get yourself into a slump that nobody really has noticed how it could happen. No, nobody notices again because it is death by a thousand cuts, right? It's the same in other countries. In the Netherlands, this happened when they tried to kind of consolidate their budget. It's been the same in the UK where the preference has always been for kind of distributing spending cuts across different departmental lines and acting surprised 10 years later when nothing is functioning properly. Yeah, exactly. So I think that important choices are for France and very important strategic choices in terms of governance and also in terms of the political system. Are we now sort of after all this, having observed 50 how many days? 51 days? 51 days. Are we now more confident that France will get through this sort of turmoil, like Macron's spontaneous decision has caused? Or are we less confident? It depends on what you mean by getting through this. Yeah, I think also it really depends on how we'll just see the whole episode of musical chairs with the prime ministers. It was so much everyday. Another name came up. It was just a constant debate. If they conclude that they had enough and they just want to move on with life, then I think Banyi has the authority to be a diplomatic leader who could actually steer through and people no longer remember that there was such a thing as enough people, at least not the sort of the mainstream kind of people. But of course, on the left, it will still linger on and will actually create another core tenant in their campaign for the future. I still try to figure out whether the voters knew what they were voting for. I still think it was so unclear when you look at the voting behavior. We know the results, but still where it came from, what intention this vote reveals, what it reveals to us. So it's also the underlying intent. I think that is not clear. Yeah, the other thing was that, I mean, fundamentally, this entire plan was hatched extremely quickly because the situation that led to this, that the parties found themselves in with all these three runoffs was unusual, not really something anybody expected. So I think as well, the next time around, the next time they go to these legislative elections, I guess the story might be quite different as parties have more time to figure out what exactly they want and what they will do. And their voters will also be figuring that out too, and not acting in this kind of very quick reactive mode. But yeah, in terms of whether France will quote unquote get through this, if we're thinking about the immediate political impasse, like, you know, the immediate political situation, then I guess making Barney a Prime Minister is it's about as good as you can do in the sense that I can't think of anybody else who would stand a better chance of surviving beyond next summer. If that is your number one objective to have a government that will not immediately get toppled at the first opportunity. What do you survive the whole term? I mean, you can just play him. I mean, I have no idea if he will or not, but I guess the question is, would anybody stand a better chance of doing a Kim Barney? Would there be any other strategy that works better than this? And I'm not, I'm not sure the answer is yes to that. So I don't know. I don't know in terms of technicians, other people from the civil society, whether all the names have been actually explored, I think, again, it was a matter of timing, right? It was a matter of timing to write, you know, like, they just had to find somebody because the budget needed to be prepared and they, you know, they needed a government. France really does not have the mechanisms for these long, I don't know, Dutch or Belgian-style drawn-out processes, but yeah, getting back to the question of getting through this. I think in the long term, even beyond 2027, there are a couple of big issues with France, which concerned me, right? One of them economic and one of them political. Economically, I think that France is still struggling a little bit to find its place in the kind of new global economy and end in Europe to a certain extent. Like France's economic growth at the moment is hardly spectacular. We talk a lot about Germany because that is the kind of big problem situation with Europe's economy at the moment. But then in France, too, clearly you have a situation where part of what's prompted this budget crisis was over-optimistic assumptions about French economic growth, which didn't pan out. So there has to be a question of what exactly is going to get France back on track? What would get the economy performing better in the longer run? So that's one issue. And the second issue is political, which is that it seems to me like there is a bit more of an issue with constitutional legitimacy in France. It was notable to me how many people seem to think that what Macron has been doing with nominating the Prime Minister with 49.3, overriding parliament, that this was somehow illegitimate, despite the fact that he is entitled to do that within the remit of the Constitution. It's also noticeable that a lot of the Rissammerman-Nacional's promises involve changing the Constitution. It kind of seems that quite a few people in France, both from the left and the right, and maybe even some in the center, are fundamentally kind of fed up with the Fifth Republic. Yeah, I agree with that. And I always think like listening to the discourse on the left or and then reading articles and interviews with people from the right, they have a completely different discourse. It feels like two different bipolar worlds of how they view what it had happened. I mean, we know the facts, but how they read on what the meaning is is completely different when you come from the left or when you come from the right. I think what for the left, it really feels like really sore still. And the fact that they didn't have any choices, and they didn't present any choices, they just were hammering down on their right, on their legitimate right, given by the election results, or even before trying to coerce the centrist in order to block the RN, which was the main thing, right, to block the RN for coming to power. These kind of things felt a little bit like as if Milashore doesn't work in the Fifth Republic that way. I mean, the whole idea of the left and how they want to govern doesn't really work in the Fifth Republic as it is. Yeah, I mean, I think the fundamental issue is that like most other countries in Europe, especially the larger ones, France is becoming more politically pluralistic. And that I don't think it's ultimately compatible with a system in which you vest so much power in the hands of one person. Yeah, yeah, and the system is not really, I mean, when we talk about cohabitation as that, that's the thing in France, when the president was one party, and the government was then nominated from the other party, which was something that the French were kind of fond of. We have several periods throughout the history of the Fifth Republic where it happened. But this time you can't even talk about the cohabitacion, because it's not only two parties, but it's like three blocks, and none of them has a majority. And that was not the case in the past, where at least the prime minister had a majority behind him in Parliament. I didn't have to worry about it. So this is kind of something that it happens really, we always write about in Netherlands and Belgium, and they kind of use your long-term negotiations here for France. It feels like they are close to an office breakdown because they never experienced something like that. Yeah, yeah, and in both the Netherlands and Belgium, of course, they're having some issues, I think at the moment, but you know, they have long histories of political pluralism. And they're used to how it works in terms of negotiation, what skill is it? It's not really about opposing. I mean, I think the French system was also very much geared towards that the opposition parties were there to oppose, and actually challenged the ones in power, which works when you have a strong power. Yeah, but if you had that system in Belgium with the Netherlands, nothing would get done. And increasingly, it's the case in France that if you have that system, nothing is going to get done. Exactly. So what would be the mechanism of a change, say, you know, what would be the mechanism towards the Sixth Republic? How would this in practice have to start? Would it be the president himself who would start and suggest this, or would this be some other committee, or what would be the, I was sure there would be a referendum? Yeah, no, no. I mean, well, you could potentially avoid a referendum. It's not set in stone that you have to do that, although probably anybody would, but you would have to go about changing the Constitution. And fundamentally, I think the issue there is that you'd have to convince the Senate to do that. And that would be quite a tall order, given the composition of the Senate now and for the foreseeable future. Even if you could get the requisite majority to do it in the National Assembly, which is another story, because even I don't mean, I didn't mean the sort of the the R N way of changing the Constitution. I mean, a broad based consensual centrist idea of shifting from the from the system that we have right now, the frances right now towards the parliamentary system or another another another another, another public. Yeah, the question is, I don't know whether that could happen, because I think there are two things. One is that even if lots of people want to six republic, I'm not sure they agree necessarily on what that six republic has to look like. And I think as well, the other difficulty is that beyond the minimal changes to the constitutional framework, I think both sides left and right would want to bolt on all sorts of different aspects in their new system, which they would inevitably end up disagreeing over. Then you get a situation like Chile, and I'm some of our listeners might be aware of what's been going on there, where you have dueling constitutional conventions between left and right wing constitutions and nobody can get it passed. Everybody agrees that they're unhappy with the Constitution, but nobody can seem to agree on what they want to change it to. And maybe that's where you get to. That is exactly also what happens at the level of the EU. So with a treaty change reform, we all agree it's not working, but there's no agreement on what it should replace with. On that note, thank you for listening. Until next week.